Answer:
1820
Explanation:
The HHI is calculated by squaring the market share of each firm in the industry.
21% ²+ 20%² + 19%² + 18%² + 17%² + 1%² +1%² +1%² +1%² +1%² = 1820
Mojo Mining has a bond outstanding that sells for $2,120 and matures in 18 years. The bond pays semiannual coupons and has a coupon rate of 6.66 percent. The par value is $2,000. If the company's tax rate is 40 percent, what is the aftertax cost of debt?
A. 3.96%
B. 6.24%
C. 5.82%
D. 3.66%
E. 3.45%
Answer:
D. 3.66%
Explanation:
For computing the after tax cost of debt we need to apply the RATE formula i.e to be shown in the attachment
Given that,
Present value = $2,120
Future value or Face value = $2,000
PMT = $2,000 × 6.6% ÷ 2 = $66.60
NPER = 18 years × 2 = 36 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this,
1. The pretax cost of debt is 3.05% × 2 % = 6.10%
2. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 6.10% × ( 1 - 0.40)
= 3.66%
Stock Investment Transactions On September 12, 2,000 shares of Aspen Company were acquired at a price of $50 per share plus a $200 brokerage commission. On October 15, a $0.50-per-share dividend was received on the Aspen stock. On November 10, 1,200 shares of the Aspen stock were sold for $42 per share less a $150 brokerage commission. In your computations, round per share amounts to two decimal places. When required, round final answers to the nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank. Journalize the entries to record the original purchase, the dividend, and the sale under the cost method.
Answer: Please see answer in explanation column
Explanation:
1. Journal to record original purchase.
Date Account Debit Credit
Sept 12 Investment- Aspen stock $100,200.
Cash $100,200.
Calculation
Cash = 2,000 shares x $50 per share = 100,000 + brokerage commission of $200
= $100,200.
2.Journal to record dividend received
Date Account Debit Credit
Oct 15 Cash $1000.
Dividend revenue $1000
Calculation
dividend received = $2000 x $0.50-per-share dividend =$1000
3..Journal to record sale of investment
Date Account Debit Credit
Nov 10 Cash $50,250
Loss from sale $9,870
Investment - Aspen stock $60,120
Calculation
Purchase price of 1 Share in Aspen stock = 100,200/2000 = 50.10 per share
Investment = share sold x purchase amount of 1 share in Aspen stock
1,200 x 50.10= $60,120
Cash = 1,200 shares x $42 per share = 100,000 - brokerage commission of $150
= $50,250
Lisa loaned $6,000 to her brother several years ago. In the current year, she determines that the loan is uncollectible. Lisa also has a $4,000 long-term capital gain in the current year from a stock sale. How much of the $6,000 loan can Lisa use/deduct in the current year g
Answer:
$0
Explanation:
Data provided in the question
Loaned amount several years ago = $6,000
Long term capital gain = $4,000
Based on the above information
Lisa is not in the position to subtract the loss from the loan i.e. uncollectible as according to the Internal revenue service (IRS) it is mentioned that if the loan is given to a brother the same is treated as a gift
So, the amount would be $0
The income statement and selected balance sheet information for Direct Products Company for the year ended December 31 are presented below. Income Statement Sales Revenue Expenses S 41,600 Cost of Goods Sold Depreciation Expense Salaries and Wages Expense Rent Expense Insurance Expense Interest Expense Utilities Expense 17,500 1,300 8,300 3,800 1,550 1,450 Net Income S 6,650 Selected Balance Sheet Accounts Ending Beginning Balances Balances Accounts Recelvable Inventory Accounts Payable Prepaid Rent Prepaid Insurance Salaries and Wages Payable Utilities Payable $570 820 430 29 27 600 685 480 32 43 17
Required:
Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.
Answer:
Direct Products Company
Operating cash flow statement
For the year ended December 31, 202x
Net income $6,500
Adjustments to net income:
Depreciation expense $1,300Decrease in accounts receivable $30Decrease in prepaid insurance $5Increase in salaries payable $23Increase in utilities payable $7Increase in inventory ($135)Increase in prepaid rent ($7)Decrease in accounts payable ($50) $1,173Net cash flow provided by operating activities $7,673
Explanation:
Net Income $6,650
Depreciation Expense $1,300
ending beginning
Accounts Receivable $570 $600
Inventory $820 $685
Accounts Payable $430 $480
Prepaid Rent $29 $22
Prepaid Insurance $27 $32
Salaries Payable $66 $43
Utilities Payable $24 $17
A NASDAQ security is bid at $30.25 and offered at $30.75. An over-the-counter trader effects a trade at $30.75 and charges a commission of $.50 to the customer. The price that will show on the tape is:
Answer:
$30.75
Explanation:
Given that
Security bidding = $30.25
Offered price = $30.75
over the counter trading = $30.75
Commission charged = $0.50
based on the above information, the price that shows on the tape is equivalent to the over the counter trading price i.e $30.75 also it does not include the commission charged i.e $0.50
Hence, the price is $30.75
Suppose that hypothetically there are only two countries in the world: Japan and South Korea Now suppose that at the end of year 2, Japan has positive net exports of $20 billion against South Korea. In addition, Japan has earned $1 billion in interest from its South Korean assets over the course of year 2. Question: What are the respective balances for the current account, and the financial and capital account for Japan at the end of year 2
Answer:
i) $21 billion
ii) $0
iii) $0
Explanation:
GIVEN DATA : ( two countries )
At the end of year 2
net exports = $20 billion for Japan
Interest earned from assets = $1 billion for Japan
i) The balances for the current account for Japan
export value + interest earned from assets
= $20 billion + $1 billion = $21 billion
ii) Financial account for Japan
Financial account for Japan will be zero because there is no increase or decrease in number of its assets within the given period
iii) capital account for Japan
Capital account of Japan will will have a zero balance. this is because Capital account is used to record foreign investments, local investment and the reserve account as well. and there was no investment captured within the given time that was made by Japan
Sheridan Company has several outdated computers that cost a total of $18200 and could be sold as scrap for $6200. They could be updated for an additional $3000 and sold. If Sheridan updates the computers and sells them, net income will increase by $9000. What amount would be considered sunk costs
Answer:
$18200
Explanation:
Sunk cost is cost that has already been incurred and cannot be recovered. It should not be considered when making future decisions.
The computers costs $18200. This amount has already been incurred and it cannot be recovered.
A decrease in the basis will __________ a long hedger and __________ a short hedger. Group of answer choices hurt; hurt hurt; benefit benefit; have no effect upon benefit; benefit benefit; hurt
Answer:
hurt, benefit
Explanation:
The basis in a future contract is defined as the difference between the spot price of the asset in the cash market and the price of the same assets future contract.
A short hedge is an investment strategy that is used to protect hedge, against the risk of future decline in asset price or basically to hedge against potential losses by selling at a determined rate. This means that when one is in possession of a commodity and in order to protect against a decline, in the market, you sell (go short) the future contract , while long hedge is when you anticipate a need for the underlying commodity in the future. It means that to protect against an increase in the market price, you buy (go long) the future contract. Then when you are ready to buy the commodity, any increase in the market price is offset by your gain on the future contract.
The above means that where an asset and a contract are liquidated before due dates , there would be basis risk hence both the future and spot price need not move in lockstep before delivery date. This means that a decrease in the basis will benefit the short hedger and hurt the long hedger.
The Closed Fund is a closed-end investment company with a portfolio currently worth $200 million. It has liabilities of $3 million and 5 million shares outstanding.Required:a. What is the NAV of the fund? b. If the fund sells for $36 per share, what is its premium or discount as a percent of NAV?
Answer and Explanation:
The computation is shown below:
a. NAV of the fund is
= (Portfolio amount - liabilities) ÷ (outstanding shares)
= ($200 - $3) ÷ ($5)
= $39.40
b. The premium or discount as a percent of NAV is
= (Price - net asset value) ÷ (net asset value)
= ($36 - $39.40) ÷ ($39.40)
= -0.086
This represents the discount of 8.6%
We applied the above formulas
Jason has a loan that requires a single payment of $6,000 at the end of 3 years. The loan's interest rate is 10%, compounded semiannually. How much did Jason borrow? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
Answer:
Jason borrowed $4,4,77.29
Explanation:
In order to calculate this, let we will use the formula for the future value on an invested amount, semiannually, yielding interest at a certain interest rate. This is done as follows:
[tex]FV\ =\ PV(1+\frac{r}{n} )^{(n\times t)}[/tex]
where:
FV = future value = $6,000 (loan repayment)
PV = present value = amount borrowed = ??
r = interest rate = 10% = 10/100 = 0.1
n = number of compounding periods per year = 2
t = time = 3 years
[tex]6,000\ =\ PV(1+\frac{0.1}{2} )^{(2\times 3)}\\6,000\ =\ PV(1+ 0.05)^{6}\\6,000\ =\ PV(1.05)^{6}\\6,000\ =\ PV (1.340096)\\diving\ both\ sides\ by\ 1.340096\\PV = \frac{6,000}{1.340096} \\PV = \$4,477.29[/tex]
Therefore, Jason borrowed $4,4,77.29
Company FM2 must pay 100,000 in 4 years. In order to fully immunize from changes in interest rate, the company invests in a 3 year zero coupon bond that matures for 45,000 and a 5 year zero coupon bond that matures for X. The actuary for Company FM2 determined that their portfolio fully immunized their ability to meet their obligations at the current interest rate i. Calculate i.
Answer:
5. 11.1%
Explanation:
the options for this question are missing:
5%7.8%10%10.5%11.1%I prepared the following equation:
$100,000 = $45,000(1 + i)³ + x(1 + i)⁵
There is something that we must remember about zero coupon bonds, and that is that they are sold in thousands. This equation is complex, but there is an easier way to solve it. We can plug in the options to determine which % will result in a possible answer.
The answer is 11.1%, since the other options resulted in numbers which are not even close to a thousand.
$100,000 = $45,000(1.111)³ + x(1.111)⁵
$100,000 = $61,709.88 + 1.2763x
$38,290.12 = 1.2763x
x = $38,290.12 / 1.2763 = $30,000
The following data were reported by a corporation: Authorized shares 38,000 Issued shares 33,000 Treasury shares 12,500 The number of outstanding shares is:
Answer:
20,500 shares
Explanation:
Authorized shares= 38,000
Issued shares= 33,000
Treasury shares= 12,500
Therefore, the number of outstanding shares can be calculated as follows
Outstanding shares= Issued shares-Treasury shares
= 33,000-12,500
=20,500
Hence the number of outstanding shares is 20,500
At the beginning of the current year, both Doug and Amelia each own 50% of Amaryllis Corporation (a calendar year taxpayer). In July, Doug sold his stock to Kevin for $140,000. At the beginning of the year, Amaryllis Corporation had accumulated E& P of $240,000 and its current E & P is $280,000 (prior to any distributions). Amaryllis distributed $300,000 on February 15 ($150,000 to Doug and $150,000 to Alfred) and distributed another $300,000 on November 1 ($150,000 to Kevin and $150,000 to Alfred). Kevin has dividend income of:_______
a. $150,000.b. $140,000.c. $110,000.d. $70,000.e. None of the above.
Answer:
Kevin has dividend income of:_______
a. $150,000.
Explanation:
Kevin became a 50% shareholder of Amaryllis in July. So, Kevin is entitled to receive 50% of any distributions made by Amaryllis from the July date. Since Amaryllis distributed $300,000 on November 1, Kevin will receive a dividend income equivalent to $150,000 from Amaryllis. The remaining 50% goes to his partner in business. Kevin could not be entitled to the distribution made on February 15, by which date he was not yet a shareholder of Amaryllis.
A monopolist that practices perfect price discrimination has the same deadweight loss triangle as the single-price monopolist.
a) true
b) false
Answer:
The correct answer is the option B: False.
Explanation:
To begin with, the price discrimination strategy refers to a technique used by the companies in order to charge different prices to the different consumers regarding the fact of how much would they be able to pay for the product. When it comes to monopolies, a perfect price discrimination strategy would try as best as possible to capture the majority of the zone known as the "consumer surplus". And that is why that a company with a perfect price discrimination would face a small deadweight loss area due to the fact that with that strategy of price the monopolist will absorve as much as possible of that area becuase the triangle is half consumer surplus and half producer surplus.
Thematization is the process by which a framework for mutual communication and satisfaction is reached. Is this statement true or false? Group of answer choices
Answer:
True
Explanation:
Thematization refers to the process in which the choice of specific topics as a theme in a sentence. It also deals with the process in which mutual communication and the level of satisfaction are also reached so that there should be proper coordination and communication maintained. And the chances of the misunderstanding is less
Therefore the given statement is true
Assuming a bottom-up process of budget development, which of the following should be initially responsible for developing sales estimates?
a. The budget committee.
b. The accounting department.
c. The sales department.
d. Top management.
e. The marketing department.
Answer: The Sales Department
Explanation:
In budgeting, a bottom-up approach simply means that each head of department in the organization create a budget that'll be sent upwards for approval.
Assuming a bottom-up process of budget development, the sales department should be initially responsible for developing sales estimate.
Rent expense of $3,000 is allocated to Department A and Department B based on square footage. Department A has 5,000 square feet and Department B has 2,500 square feet.
The dollar amount of rent expense allocated to Department B is:_______
Answer:
$1,000
Explanation:
Calculation for the Dollar amount of rent expense allocated to department B
Using this formula
Expense allocated to Department B= Rent expense allocated to Department A and B* Department B square feet/Department A and Department B Square foot
Let plug in the formula
Expense allocated to department B =$3,000*2,500/5,000+2,500
Expense allocated to department B= $3,000 * 2,500 / 7,500
Expense allocated to department B =$7,500,000/7,500
Expense allocated to department B= $1,000
Therefore the Dollar amount of rent expense allocated to department B will be $1,000
In an attempt to bring about a change in the organization, what do you think might happen to The Learning Focus if Nemeroff fired all the existing writers and replaced them with new writers
Answer:
If all existing writers are replaced with new writers there could be a number of issues as the existing writers had experience and were use to of the type of writing required, they understand the nature of the reader. The new writers might fail to satisfy the old readers as they will be unaware of the taste the readers want and like to read. If learning focus Nemeroff fired all the existing writers the above described issues may appear.
Explanation:
If all existing writers are replaced with new writers there could be a number of issues as the existing writers had experience and were use to of the type of writing required, they understand the nature of the reader. The new writers might fail to satisfy the old readers as they will be unaware of the taste the readers want and like to read. If learning focus Nemeroff fired all the existing writers the above described issues may appear.
Lake Co. receives nonrefundable advance payments with special orders for containers constructed to customer specifications. Related information for 2021 is as follows ($ in millions): Customer advances balance, Dec. 31, 2020 $ 120 Advances received with 2021 orders 189 Advances applicable to orders shipped in 2021 182 Advances from orders canceled in 2021 36 What amount should Lake report as a current liability for advances from customers in its Dec. 31, 2021, balance sheet
Answer:
Lake Co.
Current Liability for Advances from Customers in Dec. 31, 2021 balance sheet:
Amount to report as current liability for advances from customers:
= $127
Explanation:
Advances from Customers:
Dec. 31, 2020 balance $120
Cash received 189
Total liability $309
Earned Revenue 182
Current liability $127
Advances, which Lake Co., received from customers for orders not yet fulfilled are recorded as deferred revenue or liabilities because Lake Co. is still owing the respective customers until the services or goods are provided. Earned Revenue is the value of revenue that would be reported in the income summary for which exchange of value or promises had been completed.
Answer:
the guy above me is correct!!
Explanation:
What element of the tourism and recreation industry has increased tenfold over the last fifteen years, bringing increased revenue to cities in the Coastal South such as Miami, Fort Lauderdale, and Tampa
Answer: A. The Cruise Ship Industry
Explanation:
The Cruise Ship Industry has been until recently (due to the Pandemic) one of the fastest growing elements of Tourism and Recreation in the United States having increased tenfold over the last 15 years.
Indeed in 2018, it was estimated that the industry added over $52 billion to the US economy as well as employing over 400,000 people.
This massive growth has benefitted port cities from which these Cruises take off and return to such as Miami, Fort Lauderdale, and Tampa immensely.
Determine the value-added, non-value-added, and total lead times, and the value-added ratio under the present and proposed production approaches. If required, round percentages to one decimal place. Present Approach Proposed Approach Value-added time 23 min 23 min Non-value-added time 1,582 min 105 min Total lead time 1,605 min 1,605 min Value-added ratio (as a percent) 14 % 21 %
Answer:
Hello some parts of your question is missing attached below is the missing part
Answer : value added times : 30 minutes , 30 minutes
non-value added times: 1210 minutes, 130 minutes
Total lead times : 1240 minutes, 160 minutes
value added time as a ratio: 2.4%, 18.8%
Explanation:
Given data:
production batch sizes = 40 units
process step 1 = 6 minutes
process step 2 = 10 minutes
process step 3 = 6 minutes
process step 4 = 8 minutes
Determining : The value added, non-value added , total lead times and value added ratio under the present and proposed production approaches
UNDER PRESENT PRODUCTION APPROACH
Th value added time:
= summation of all process times = (6+10+6+8) = 30 minutes
Non-value added time:
= Value added time *(Batch size -1) + move time between each step
= 30*39+8*5
= 1170 +40 = 1210 minutes
total lead time :
= value added time + non-value added time
= 30 + 1210 = 1240 minutes
value added time as a percentage/ratio
(value added time / total lead time) * 100
= 30 / 1240 * 100 = 2.4%
UNDER PROPOSED PRODUCTION APPROACH
value added time :
= summation of all process times = (6+10+6+8) = 30 minutes
Non-value added time :
= Value added time *(Batch size -1) + time between each step
= 30*4+2*5 = 120 + 10 = 130 mins
total lead time :
= value added time + non-value added time = 30 +130 = 160 mins
value added time as a percentage/ratio:
(value added time / total lead time ) * 100
= (30 / 160) * 100 = 18.8%
Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2013. (Round your answers to 2 decimal places.)?
Current ratio
Acid-test ratio
Gross margin ratio
NELSON COMPANY
Unadjusted Trial Balance
January 31, 2013
Debit Credit
Cash $ 24,600
Merchandise inventory 12,500
Store supplies 5,900
Prepaid insurance 2,300
Store equipment 42,900
Accumulated depreciation—Store equipment $ 19,950
Accounts payable 13,000
J. Nelson, Capital 39,000
J. Nelson, Withdrawals 2,100
Sales 115,200
Sales discounts 2,000
Sales returns and allowances 2,250
Cost of goods sold 38,000
Depreciation expense—Store equipment 0
Salaries expense 31,300
Insurance expense 0
Rent expense 14,000
Store supplies expense 0
Advertising expense 9,300
Totals $ 187,150 $ 187,150
Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. Nelson Company uses a perpetual inventory system.
a. Store supplies still available at fiscal year-end amount to $2,800.
b. Expired insurance, an administrative expense, for the fiscal year is $1,500.
c. Depreciation expense on store equipment, a selling expense, is $1,675 for the fiscal year.
d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,300 of inventory is still available at fiscal year-end.
Answer:
NELSON COMPANY
A. Current Ratio = Current Assets/Current Liabilities
= $38,500/$13,000
= 2.96 : 1
B. Acid-test Ratio = Current Assets - Inventory/Current Liabilities
= $24,600/$13,000
= 1.89 : 1
C. Gross margin ratio = Gross margin/Net Sales x 100
= $70,750/$110,950 x 100
= 63.77%
Explanation:
a) Data and Calculations:
NELSON COMPANY
1. Unadjusted Trial Balance as of January 31, 2013
Debit Credit
Cash $ 24,600
Merchandise inventory 12,500
Store supplies 5,900
Prepaid insurance 2,300
Store equipment 42,900
Accumulated depreciation—
Store equipment $ 19,950
Accounts payable 13,000
J. Nelson, Capital 39,000
J. Nelson, Withdrawals 2,100
Sales 115,200
Sales discounts 2,000
Sales returns and allowances 2,250
Cost of goods sold 38,000
Depreciation expense—
Store equipment 0
Salaries expense 31,300
Insurance expense 0
Rent expense 14,000
Store supplies expense 0
Advertising expense 9,300
Totals $ 187,150 $ 187,150
2. Adjusted Trial Balance as of January 31, 2013
Debit Credit
Cash $ 24,600
Merchandise inventory 10,300
Store supplies 2,800
Prepaid insurance 800
Store equipment 42,900
Accumulated depreciation—
Store equipment $ 21,625
Accounts payable 13,000
J. Nelson, Capital 39,000
J. Nelson, Withdrawals 2,100
Sales 115,200
Sales discounts 2,000
Sales returns and allowances 2,250
Cost of goods sold 40,200
Depreciation expense—
Store equipment 1,675
Salaries expense 31,300
Insurance expense 1,500
Rent expense 14,000
Store supplies expense 3,100
Advertising expense 9,300
Totals $ 188,825 $ 188,825
3. NELSON COMPANY
Income Statement for the year ended January 31, 2013:
Sales Revenue $110,950
Cost of goods sold 40,200
Gross profit $70,750
Depreciation expense—
Store equipment 1,675
Salaries expense 31,300
Insurance expense 1,500
Rent expense 14,000
Store supplies expense 3,100
Advertising expense 9,300 60,875
Net Income $ 9,875
4. Sales Revenue $115,200
Sales discount & allowances (4,250)
Net Sales Revenue $110,950
5. NELSON COMPANY
Balance Sheet as of January 31, 2013:
Assets:
Cash $ 24,600
Merchandise inventory 10,300
Store supplies 2,800
Prepaid insurance 800
Current Assets: 38,500
Store equipment 42,900
Accumulated depreciation—
Store equipment (21,625) 21,275
Total Assets $ 59,775
Liabilities + Equity:
Accounts payable $13,000
J. Nelson, Capital 39,000
J. Nelson, Withdrawals (2,100 )
Net Income $ 9,875
Total Liabilities + Equity $ 59,775
a) Nelson Company's current ratio is the measure of the company's ability to settle maturing short-term liabilities with short-term financial resources. It is is measured as the relationship between current assets and current liabilities.
b) Nelson's acid-test ratio takes away the encumbrances that can slow the conversion of current assets into cash for the settlement of current liabilities. In this case, the inventory, stores supplies, and prepaid insurance are excluded.
c) Nelson has a robust gross margin ratio of more than 60%. This means that it is able to limit the cost of goods sold to below 40%. However, management of Nelson Company is unable to control its periodic costs in order to generate reasonable net income, as it can only turn less than 9% of the sales into returns for J. Nelson.
According to the NELSON COMPANY
Current ratioA. The Current Ratio = Current Assets/Current Liabilities
Then = $38,500/$13,000
now = 2.96 : 1
B. After that Acid-test Ratio = Current Assets - Inventory/Current Liabilities
Then = $24,600/$13,000
Now = 1.89 : 1
C. When the Gross margin ratio = Gross margin/Net Sales x 100
Then = $70,750/$110,950 x 100
Now = 63.77%
1. when Unadjusted Trial Balance as of January 31, 2013
Debit Credit
Cash $ 24,600
Merchandise inventory 12,500
Store supplies 5,900
Prepaid insurance 2,300
Store equipment 42,900
Accumulated depreciation—
Store equipment $ 19,950
Accounts payable 13,000
J. Nelson, Capital 39,000
J. Nelson, Withdrawals 2,100
Sales 115,200
Sales discounts 2,000
Sales returns and allowances 2,250
Cost of goods sold 38,000
Depreciation expense—
Store equipment 0
Salaries expense 31,300
Insurance expense 0
Rent expense 14,000
Store supplies expense 0
Advertising expense 9,300
Totals $ 187,150 $ 187,150
2. when Adjusted Trial Balance as of January 31, 2013
Debit Credit
Cash $ 24,600
Merchandise inventory 10,300
Store supplies 2,800
Prepaid insurance 800
Store equipment 42,900
Accumulated depreciation—
Store equipment $ 21,625
Accounts payable 13,000
J. Nelson, Capital 39,000
J. Nelson, Withdrawals 2,100
Sales 115,200
Sales discounts 2,000
Sales returns and allowances 2,250
Cost of goods sold 40,200
Depreciation expense—
Store equipment 1,675
Salaries expense 31,300
Insurance expense 1,500
Rent expense 14,000
Store supplies expense 3,100
Advertising expense 9,300
Totals $ 188,825 $ 188,825
3. NELSON COMPANY
Income Statement for the year ended January 31, 2013:
Sales Revenue $110,950
Cost of goods sold 40,200
Gross profit $70,750
Depreciation expense—
Store equipment 1,675
Salaries expense 31,300
Insurance expense 1,500
Rent expense 14,000
Store supplies expense 3,100
Advertising expense 9,300 60,875
Net Income $ 9,875
4. Sales Revenue $115,200
Sales discount & allowances (4,250)
Net Sales Revenue $110,950
5. NELSON COMPANY
Balance Sheet as of January 31, 2013:
Assets:
Cash $ 24,600
Merchandise inventory 10,300
Store supplies 2,800
Prepaid insurance 800
Current Assets: 38,500
Store equipment 42,900
Accumulated depreciation—
Store equipment (21,625) 21,275
Total Assets $ 59,775
Liabilities + Equity:
Accounts payable $13,000
J. Nelson, Capital 39,000
J. Nelson, Withdrawals (2,100 )
Net Income $ 9,875
Total Liabilities + Equity $ 59,775
When the Nelson Company's current ratio is the measure of the company's ability to settle maturing short-term liabilities with short-term financial resources. also, It is measured as the relationship between current assets and also current liabilities.
Although when Nelson's acid-test ratio takes away the encumbrances that can slow the conversion of current assets into cash for the settlement of current liabilities. Thus, In this case, the inventory, stores supplies, and also prepaid insurance are excluded.
When Nelson has a robust gross margin ratio of more than 60%. This means that it can limit the cost of goods sold to below 40%. Thus, the management of Nelson Company is unable to control its periodic costs to generate reasonable net income, also as it can only turn less than 9% of the sales into returns for J. Nelson.
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Cost of common stock: Whitewall Tire Co. just paid a $1.60 dividend on its common shares. If Whitewall is expected to increase its annual dividend by 2 percent per year into the foreseeable future and the current price of Whitewall common shares is $11.66, what is the cost of common stock for Whitewall
Answer:
Cost of common stock for Whitewall is 16.00%
Explanation:
Ke = D1 / Price +g
D1 = Ke (Price + g)
D1 = $1.60 * (1+0.02)
D1 = $1.60 * (1.02)
D1 = $1.632
Ke = D1 / Price +g
We solve for Current dividend to derive the Cost of common stick
Ke = 1.632 / (11.66) + 2%
Ke = 1.632 / 11.66 + 0.02
Ke = 0.139966 + 0.02
Ke = 0.159966
Ke = 15.9966%
Ke = 16.00%
There is a 3 percent defect rate at a specific point in a production process. If an inspector is placed at this point, all the defects can be detected and eliminated. The inspector would cost $8 per hour and could inspect units in the process at the current production rate of 30 per hour. If no inspector is hired and defects are allowed to pass this point, there is a cost of $10 per defective unit to correct the defects later on. Assume that the line will operate at the same rate (i.e., the current production rate) regardless of whether the inspector is hired or not. a. If an inspector is hired, what will be the inspection cost per unit? (Round your answer to 3 decimal places.) Cost per unit $ b. If an inspector is not hired, what will be the defective cost per unit? (Round your answer to 3 decimal places.) Cost per unit $ c. Should an inspector be hired based on costs alone? Yes No
Answer:
1a. $2.67 cost per unit
1b. $0.3 cost per unit
1c. Yes
Explanation:
1a. Calculation for what will be the inspection cost per unit If an inspector is hired
The following details were given in the question.
Defective average =3/100= 0.03
inspection rate = 30 per hour
Cost of inspector = 8 per hour
Correction cost = $10 each
Using this formula
Hired inspector =Cost per hour/Current production rate per hour
Let plug in the formula
Hired inspector=8 per hour/30 rate per hour
Hired inspector =0.267×100
Hired inspector=$2.67 cost per unit
1b. Calculation for what will be the defective cost per unit If an inspector is not hired
Using this Formula
No inspector=Defect rate %/Cost per defective
Let plug in the formula
No inspector= 3/100×$10
No inspector= $0.3 cost per unit
1c. Based on the above calculation the inspector should be hired.
A customer has requested that Inga Corporation fill a special order for 3,000 units of product K81 for $30 a unit. While the product would be modified slightly for the special order, product K81's normal unit product cost is $21.30:
Direct materials $ 5.40
Direct labor 6.00
Variable manufacturing overhead 2.50
Fixed manufacturing overhead 7.40
Unit product cost $21.30
Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product K81 that would increase the variable costs by $1.00 per unit and that would require an investment of $14,000 in special molds that would have no salvage value.
This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. If the special order is accepted, the company's overall net operating income would increase (decrease) by:______.
A. $14,200
B. $31,300
C. $(13,700)
D. $(2,800)
Answer:
B. $31,300
Explanation:
Sales $90,000
Less: Variable Cost $44,700
Less: Additional Fixed Cost $14,000
Increase in Operating Income $31,300
Workings:
Sales= 3,000 unit * $30
Sales= 90,000
Variable cost = 3,000 unit * (5.4 + 6 + 2.5 +1)
Variable cost = 3,000 * 14.9
Variable cost = $44,700
McCall Corporation has a capital structure consisting of 55 percent common equity, 30 percent debt, and 15 percent preferred stock. Any debt issues would have a pre-tax cost of 9.5%. Preferred stock can be issued for a cost of 11.5%. Common equity can be issued, but flotation costs of $4.25 per share of common stock would be paid. McCall common stock is currently selling in the market at $65 per share. McCall recently paid a dividend of $4 per share and company earnings and dividends are expected to grow at an annual rate of 8% indefinitely. McCall has a marginal tax rate of 35% and the firm wants to keep its current capital structure. If the firm needs to raise additional equity, what will be the firm's cost of capital?
Answer:
WACC = 12.14%
Explanation:
Cost of debt = 9.5% x (1 - 35%) = 6.175%
Cost of preferred stock = 11.5%
Cost of equity (Re) = {D₁ / [P₀(1 - F)]} + g
Re = {($4.25 x 1.08) / [$65 x (1 - $4.25/$65)]} + 8% = ($4.59 / $60.75) + 8% = 15.56%
WACC = (15.55% x 0.55) + (6.175% x 0.30) + (11.5% x 0.15) = 8.56% + 1.85% + 1.73% = 12.14%
The bottom-up method of estimating where work package time and costs for past projects are used as a starting point for a new project and adjustments are made based on differences in the new project is known as the ___________.
a. range estimating.
b. phase estimating method.
c. WBS method.
d. template method.
e. parametric procedure.
Pacific Cruise Lines is a defendant in litigation involving a swimming accident on one of its three cruise ships.Required:a. The likelihood of a payment occurring is probable, and the estimated amount is $1.17 million. b. The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $0.97 to $1.17 million. c. The likelihood of a payment occurring is reasonably possible, and the estimated amount is $1.17 million. d. The likelihood of a payment occurring is remote, while the estimated potential amount is $1.17 million.
Answer:
a. The likelihood of a payment occurring is probable, and the estimated amount is $1.17 million.
THE CONTINGENT LIABILITY NEEDS TO BE RECORDED SINCE IT IS PROBABLE THAT IT WILL OCCUR AND THE AMOUNT CAN BE ESTIMATED.
b. The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $0.97 to $1.17 million.
YOU ONLY HAVE TO DISCLOSE THE LIABILITY IN THE NOTES OF THE FINANCIAL STATEMENTS SINCE THE AMOUNT CANNOT BE DETERMINED.
c. The likelihood of a payment occurring is reasonably possible, and the estimated amount is $1.17 million.
YOU ONLY HAVE TO DISCLOSE THE LIABILITY IN THE NOTES OF THE FINANCIAL STATEMENTS SINCE THE EVENT IS ONLY REASONABLY POSSIBLE AND NOT PROBABLE.
d. The likelihood of a payment occurring is remote, while the estimated potential amount is $1.17 million.
NO RECORDING NOR DISCLOSING IS REQUIRED SINCE THE POSSIBILITY OF OCCURRING IS REMOTE.
A risk-free, zero-coupon bond has 15 years to maturity. Which of the following is closest to the price per $1,000 of face value at which the bond will trade if the current YTM is 6.1%?
a $411.40
b. $553.15
c $663.78
d. $885.05
e. $774.42
Answer:
The bond will trade at a. $411.40.
Explanation:
Use the following data to find the price, PV of the bond.
n = 15
pmt = $0
p/yr = 1
fv = $1,000
ytm = 6.10 %
pv = ?
Using a financial calculator, the bond price (PV) is $411,4047 or $411,40
Conclusion :
The bond will trade at $411.40 if the current YTM is 6.1%.
On January 1, the listed spot and futures prices of a Treasury bond were 95.4 and 95.6. You sold $100,000 par value Treasury bonds and purchased one Treasury bond futures contract. One month later, the listed spot price and futures prices were 95 and 94.4, respectively. If you were to liquidate your position, your profits would be a Group of answer choices $125 profit. $1,060.50 loss. None of the options are correct. $125 loss. $1,062.50 profit.
Answer:
None of the options are correct.
Explanation:
We start by calculating the net change of the treasury bond position.
= $95,125 - $95,000
= $125
The long treasury bond position gains $125 after a month.
We will also calculate the net change of the treasury bond futures contract.
= $94,125 - $95,187.50
= -$1,062.50
Therefore, Net profits is;
= $125 - $1,062.50
= -$937.50